A $24m cloud for $6m value: How Bangladesh’s Oracle deal backfires

Infographics: TBS

When Bangladesh signed a three-year, $18 million agreement with US-based tech company Oracle to build a "dedicated national cloud," it was presented as a cornerstone of the then Awami League government's Smart Bangladesh vision.

Eighteen months later, the project stands at the centre of a growing controversy. Internal documents and government letters reviewed by TBS show that the state-owned Bangladesh Data Center Company Limited (BDCCL), which operates the system, has spent nearly $24 million, including taxes and import duties, while realising less than $6 million in value.

The deal, signed in April 2024, locked BDCCL into rigid payment terms, costly import obligations, and service clauses that officials find "restrictive," preventing the company from offering cloud capacity to private clients.

Senior officials, including Chief Adviser's Special Assistant on Posts, Telecommunications, and Information Technology Faiz Ahmad Taiyeb and BDCCL Managing Director Tawfiq Al Mahmud, have written to Oracle describing the arrangement as "unsustainable" and urging the company to amend 10 key provisions of the contract.

Taiyeb told TBS, "We are in discussion with Oracle and they have agreed to negotiate."

However, Rubaba Dowla, country managing director of Oracle Bangladesh, Nepal and Bhutan, did not respond to e-mail seeking clarification.

A former letter addressed to her on 31 October seeking Oracle's position was not replied to.

Contract that backfired

What began as a flagship Smart Bangladesh initiative has turned into a cautionary tale about the cost of adopting global technology without local safeguards.

The total contract value was $18 million, divided into annual commitments of $3 million, $6 million, and $9 million for the three years ending in 2027. After adding import duties and taxes, BDCCL's exposure reached nearly $24 million, according to internal financial estimates reviewed by TBS.

In return, Oracle was to deliver cloud infrastructure services to government entities, allowing critical data to be stored domestically while benefiting from Oracle's global technology stack.

But by early 2025, officials began warning that the contract's structure was "commercially unsustainable" and heavily skewed in Oracle's favour. As one internal memo summarised: "A $24 million cloud that delivers $6 million in value is not digital transformation – it's digital dependency."

On 5 May 2025, Taiyeb sent a formal letter to the country managing director of Oracle Bangladesh.

"A project that is consuming $23.93 million while earning less than $6 million USD cannot be continued unless made sustainable," the letter stated.

An internal assessment attached to the letter painted a bleak picture. It showed BDCCL's first-year utilisation of Oracle's services at 72%, translating to a realised value of $3.82 million against an $18 million total commitment.

"The projected earnings and usage are far below contractual expectations," the ICT Division's confidential memo concluded. "At this rate, cumulative losses may exceed $18 million by the end of the term."

While Taiyeb's letter urged Oracle to review the terms "to ensure mutual benefit and long-term viability," Oracle Bangladesh chief executive was asking for payments for the services it provided.

TBS has seen a letter, dated 6 October this year and addressed to the secretary of the finance ministry, where Rubaba Dowla said Oracle has not received any payments to date for the services it offered under the contract signed with BDCCL.

She sought an "urgent meeting" to discuss the issue.

Hardware without ownership

A central grievance is the way Oracle structured the import of its hardware. Although Oracle retains ownership of all Dedicated Region Cloud at Customer equipment, BDCCL was designated as the Importer of Record, making it liable for import duties and taxes totalling $3.68 million.

"BDCCL has paid for equipment it neither owns nor controls," the ICT Division's analysis noted. "This contradicts international norms, where the vendor owning the hardware bears such costs."

In another letter sent later that month, the BDCCL managing director formally requested that Oracle reimburse or offset the duties.

Officials involved in the original negotiations said the "Importer of Record" clause was accepted in 2024 under pressure to fast-track the deal before elections. Under Oracle's Annual Universal Credit system, BDCCL must pay fixed amounts each year – $3 million, $6 million, and $9 million – regardless of actual consumption. Unused credits expire annually, meaning BDCCL pays for capacity it does not use.

A financial review by the ICT Division estimates that BDCCL's actual consumption in the first year was $2.15 million, or roughly 70% of the credits purchased.

BDCCL has proposed allowing unused credits to roll over year to year and aligning prices with market rates, which it says are 30-40% lower than Oracle's charges.

BDCCL is restricted by contract from offering Oracle's DRCC services to private companies. Only the government or majority state-owned entities can use the infrastructure.

In his letter to Oracle, the BDCCL managing director proposed amending the restriction, allowing BDCCL to serve private-sector clients.

As of October 2025, Oracle has not publicly responded to that proposal.

A politically rushed deal

The contract is currently governed by English law, with arbitration based in London – standard practice for Oracle's global contracts, but one that government officials now see as a sovereignty issue.

BDCCL has asked that future disputes be resolved under Bangladeshi law, through arbitration at the Bangladesh International Arbitration Centre in Dhaka.

Officials note that countries like India and Indonesia have already localised similar contracts to ensure jurisdiction within national borders.

The Oracle agreement was signed during the tenure of the former state minister for ICT, who is now facing judicial investigation over unrelated corruption allegations.

Multiple sources inside the ministry described the Oracle deal as "politically rushed," finalised without thorough vetting by financial or legal experts.

BDCCL wants Oracle to refund import duties

According to BDCCL's correspondence, 10 key clauses in the Oracle contract are now under review. The company has asked Oracle to refund the import duties it paid for equipment the vendor still owns and to allow unused cloud credits to roll over from one year to the next. It also wants pricing aligned with regional market rates and permission to offer services to private clients under proper regulatory oversight.

Other proposed changes include removing fixed renewal fees, extending payment deadlines from 30 to 90 days, and ensuring both sides have equal rights to terminate the agreement. BDCCL has further sought longer data retention after contract expiry, arbitration under Bangladeshi law instead of English, and the replacement of costly bank guarantees with renewable pay orders.